Prior to the spread of neoliberal policies in the 1980s, the standard arrangement in most of the MENA region was for the state to provide stable employment and extensive social welfare in exchange for acquiescence in the political arena. Although it stifled political dissent and participation, this social contract did bring about real progress in access to health care and education, with formal sector employees benefitting most from state-provided social protection.

However, beginning in the 1980s governments in many countries in the region started to implement neoliberal stabilization and adjustment programmes in order to tackle the fiscal and debt crises that loomed large in the region. Designed mainly by international financial institutions (IFIs) like the World Bank and the International Monetary Fund, the reforms emphasized macroeconomic stabilization as well as economic growth through liberalization and privatization with little regard for local contexts or social consequences. Critically for MENA countries, IFI policy prescriptions required a reduction in the role of the state as the main employer, thus breaking part of the previous social contract. The situation worsened when job growth in the private sector proved inadequate to the task of reducing unemployment rates or expanding economic opportunities.

UNRISD Project Briefs pose questions, flag ideas and contribute knowledge that can improve the quality of development debates, policy and practice. They provide a concise summary of an UNRISD research project, situating it within wider social development debates; outlining its focus, objectives and methodology; and highlighting interim findings.